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FDD Talk 2016: The Menchie’s Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on May 23, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Frozen Yogurt Franchises

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Menchie's Yogurt Interior Photo

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Menchie’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Menchie’s franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Menchie’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average gross sales earned by 205 of the 306 franchised Menchie’s locations that were procured under Menchie’s Real Estate 2.0 platform
  • 2015 actual gross sales earned by Menchie’s only company-owned location in operation during the entire Measurement Period
  • 2015 actual profit and loss information (gross sales, net sales, cost of goods sold, payroll, rent, marketing fee, royalty fee, utilities, miscellaneous expenses, and net operating income) for three of the 306 franchised Menchie’s locations in operation during the entire Measurement Period. These three franchised locations were selected because their actual gross sales during the Measurement Period were closest to the average gross sales for the 205 Real Estate 2.0 platform locations included in Part 1

Section I – Background Information

Menchie’s Frozen Yogurt Pushes Toward Big Plans

Menchie’s Frozen Yogurt is the king of an $8 billion industry, and the company is planning for the long haul.

The Menchie’s 20-year-plan is to be a worldwide network of frozen yogurt stores, each identical, giving customers the same happy experience everywhere through frozen yogurt flavors and toppings and smile-sparking experiences. The company projects more than $1 billion in sales at more than 2,000 stores around the world.

Menchie’s surpassed the 500-store mark in 2015, opening its 500th location in June in Saratoga Springs, New York. The company saw a 25.6 percent unit increase in the three-year period ending in 2016, with 127 new locations. Thirty-nine stores were added in 2015 for a 7.9 percent unit increase.

The chain currently has more than 535 stores in the U.S., Puerto Rico and Canada, as well as Australia, Bahamas, Bahrain, Bangladesh, China, India, Japan, Jordan, Kuwait, Saudi Arabia, South Africa and United Arab Emirates.

Menchie’s is set to enter several other U.S. states and Canadian provinces and has stores in development in Qatar and the United Kingdom.

Menchie’s Partners with Angry Birds, Peeps

Menchie’s has gone to the birds in 2016, teaming up with both Angry Birds and Peeps.

The froyo chain partnered with Sony for flavors and toppings associated with “The Angry Birds Movie.” Limited-edition flavors are Freshly Squeezed Orange Sorbet and Strawberry Smoothie Sorbet for May and Fresh Lime Sorbet and Strawberry Greek for June, with Angry Birds gummy toppings. Movie-themed spoons are part of the package, featuring the movie’s Red, Matilda, Bomb, Chuck and Pig, along with two branded cups.

Menchie’s also offered a PEEPS-inspired frozen yogurt for March, to coincide with the Easter season. In addition to the yogurt flavor, snack-size PEEPS Chicks were among the available toppings. A Marshmallow Mania Froyo Cake topped with PEEPS Chicks was also available at participating stores.

Company Name Inspired by a Nickname

Menchie’s was founded in 2007 by Danna and Adam Caldwell. It is based in California’s San Fernando Valley. The first store was inspired by the couple’s first date at a frozen-yogurt store, and the name Menchie’s came from Adam’s nickname for Danna.

The Caldwells started franchising in 2008.

Myriad Choices for Customers

Menchie’s Frozen Yogurt offers self-serve frozen yogurt in many flavors with a wide variety of toppings. The chain features regular frozen yogurt flavors as well as some that are low-carb, nonfat, dairy-free, free of added sugar, gluten-free and vegan. The frozen treats are priced by weight.

The milk products come from a California dairy whose cows are never treated with artificial growth hormones.

Growth Comes From Making People Happy

Menchie’s ambition may be for growth, but its mission is a simple one: “We Make People Smile.”

“Menchie’s is not in the business of frozen yogurt,” CEO Amit Kleinberger said in the company’s franchise section of its website. “We are in the business of making people smile. And that’s what prospective franchisees understand right off the bat.”

The company says its devotion to guest experience is similar to how Harley Davidson sells a lifestyle and Starbucks provides community and conversation along with its coffee.

Menchie’s stores are designed so people won’t want to leave once they arrive. Customers are encouraged to visit with friends and family, reminiscent of a traditional ice cream parlor. The idea is that taking care of customers and making them smile will make them in turn take care of the business.

Section II – Estimated Costs

  • Please click here for detailed estimates of Menchie’s franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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